Business Roundup: Independent Hospitals Disappearing in OH

University Hospitals announces its intent to acquire one of two of the last independent hospitals in northeast Ohio while consolidation continues in Massachusetts and New York City.

The number of independent hospitals in northeastern Ohio continues to dwindle with news that University Hospitals has signed a letter of intent to acquire Parma Community General Hospital.

Terrence G. Deis, president/CEO of Parma Hospital

"We went through a thorough process and we think we selected the very best partner," says Terrence G. Deis, president/CEO of Parma Hospital. "It was the right combination of commitment to us and the community, a quality footprint, and culture, so we feel pretty good about it. The medical staff maybe even more importantly feels good about it. There is a lot of work to be done between now and a definitive agreement but I feel a lot better about it than I felt I would have even a few months ago."

Healthcare analyst Allan Baumgarten says the UH/Parma deal comes just weeks after UH announced a similar merger with EMH Health in Elyria, which had left Parma as the largest hospital in Cuyahoga County that wasn't already part of UH or Cleveland Clinic.

"UH and Cleveland Clinic have established northeast Ohio as a two-system market and these deals further cement that," Baumgarten said in an email exchange. "Except that Catholic Health Partners (Cincinnati HQ but several hospitals in northern Ohio) has emerged as a possible third system in the region with its partnership with the Summa Hospitals and health plan in Akron."

Although he called Parma "fiercely independent," Deis says it became time to acknowledge the realities that independent hospitals face in a consolidating market.

"We have a shrinking demographic in Northeast Ohio and the competition has stepped up. We just weren't able to compete in that environment. In the last year especially it has been our feeling that it was really inevitable," he explains.

"We have a three-hospital collaborative and last month they announced that they are merging with UH. That left us as one of two of the last independent hospitals in the Northeast Ohio area. If that didn't reek of inevitability, then nothing did."

"For us, the sequester was a big deal. We are a large Medicare facility and a 2% reduction doesn't seem like a lot, but in a decent year 2% is our whole bottom line. It's tough to make that up. The job went from getting more difficult every month to more difficult every week to more difficult every day. The money was needed to attract and retain physicians and the more we were fighting to hang on, the more difficult that became because the first thing people want to know is where are you going to be in five years."